Brazil CPI Adds Room for BCB to Act; Bets on Bigger Cut Rise
(Bloomberg) -- Below est. September CPI and progress on reforms are likely to reinforce arguments for BCB to reduce rates in October, analysts say.
- Swaps rates project 37.45bps cut by October 19 meeting vs 34.07 yesterday; while contracts continue showing market split between expectations of a 25bps or 50bps Selic rate cut, bets on a bigger move have increased
- Inflation data showed a decrease in foods prices and a slowdown in services prices, two items monitored by BCB as conditions for monetary easing, Camila Abdelmalack, economist at CM Capital Markets, says in a phone interview
- Spending cap bill approval last night in a Lower House’s committee also helps to create an “opportunity window” for BCB to cut
- There is a “big chance” that the bill will pass on the House’s floor next week, replicating the recent government coalition win in the municipal election, Jason Vieira, chief-economist at Infinity Asset, says in a e-mailed note
- Below-est. NFP in U.S. is positive for the expectation for a 50bps cut by BCB in October, Octavio de Barros, chief- economist at Bradesco, says
- September CPI has confirmed the slowdown in services inflation, showing weak activity is impacting the prices, says Haitong’s senior economist Flavio Serrano, who has kept his forecast of a 25bps cut for Selic rate in October
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Camila Abdelmalack (Cm Capital Markets Corretora De Cambio Titulo E Valores Mobiliarios Ltda)
Flavio Serrano (Haitong Bank SA)
Jason Vieira (Infinity Asset Management Administracao de Recursos)
Octavio De Barros (Banco Bradesco SA)
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